Blog Archives

On behalf of ICAP, Ken Mrozek, MAI, SRA attended the Association of Regulatory Officials (AARO) 2014 Spring Conference, where discussions included state compliance reviews, national registry, USPAP, Dodd Frank Act, AMC Regulation, mandatory background checks, and more. This year’s spring conference held April 11-13 at the Sir Francis Drake Hotel in San Francisco, California. It was attended by representatives from the TAF, ASC, AQB, APB, ASB, AMCs, Members of the Conference of State Bank Supervisors, AI, IAAO, NAA, IAC, FBI, as well as many state regulator departments (including Brian Weaver ad Mark Thompson from Illinois). Topics of discussion at the conference included:

Federal Legislation on Background Checks and the February AQB Exposure Draft

Appraiser and AMC Regulatory Issues and Updates

Additionally, time was allocated to various Advisory Council Meetings, meetings included: ASC Advisory, Qualifications Advisory, USPAP Advisory, AMC Advisory Council, and Appraiser Professional Organizations Advisory Council. The following is a summary of the discussions as presented by the various presenters.

Jim Park, Executive Director of the Appraisal Subcommittee (ASC)

New State Rating System for State Compliance

The old ASC State Rating system had three ratings: In Substantial Compliance, Not In Substantial Compliance, Not In Compliance. The new rating system, as of June 1, 2013, states have 5 ratings. Eighteen states have been rated so far in 2014 (including Illinois). The rating categories and number of states rated are:

o Excellent (2-year review cycle)/4 States

o Good (2-year review cycle)/8 States

o Needs Improvement (2-year review cycle)/6 States

o Not Satisfactory (1-year review cycle)/ 0 States

o Poor (Continuous Monitoring)/0 States

Illinois was reviewed September 2013 and was rated: Needs Improvement with a 2-Year review cycle with follow-up.

National Appraiser Registry

There was discussion on how states are keeping the National Appraiser Registry up to date with licensee information. At present, 27% of states are entering all data directly into the National Registry. California is using SOAP System, which is linked to the National Registry and automatically updates the registry daily.

Appraiser Population

Mr. Park discussed the appraiser population, which peaked in 2008 with approximately 120K appraisers. It had declined at a 3% to 5% annual rate through 2012. He noted that the rate of decline decreased in 2013 to 1%, where we are currently at approximately 100K appraisers. These numbers to not include trainees.

Since implementation as required by the Dodd Frank Act, the Appraisal Complaint Hotline website has had approximately 6,200 website hits. The call center has taken 287 calls and there were 289 federal referrals and 865 agency referrals.

AMC Regulation

The AMC Regulation Requirements were released for 60-day Comment Period. The Comment Period ends June 9th. There may be another round of requirement and another 60-day comment period. Once the new requirements are enacted, states will have 36 months to comply (with one possible 12 month extension). The AMC Registration also includes a definition of an AMC, which differs from the current Illinois definition.

Federal Regulations to Come and ASC 2014 Priorities

Mr. Park discussed additional regulations and other Appraisal Subcommittee priorities that may be seen in the future. These include:

o Interagency guidelines require all valuations to be subject to review. The Appraisal Standards Board is just starting to look at Automated Valuation Modules (AVM’s) and how the board might ensure Quality Control.

o The ASB is looking to develop a Unique Appraiser ID Number that will be tied to the National Appraiser Registry. The number would be used at the state and federal level to identify and track individual appraisers.

o The Dodd Frank Act requires the ASB to develop an AMC National Registry. This is still in progress.

David Bunton, President of The Appraisal Foundation (TAF)

Investigator Training

TAF developed courses for Investigator training. There were two levels of investigator available and one newly announced training. There are currently 310 Level I Trainers and 204 Level II Trainers. TAF will not be offering a Level III investigator training course which will focus on evaluating appraisal report writing and reporting investigator findings.

Foundation to Publish a “Digest of USPAP Court Cases”

TAF will publish a collection of court cases across the country which cites USPAP. The volume of court cases citing USPAP has grown exponentially, according to Mr. Bunton. A website subscription will be available in time. There was not timeframe given to when it would be published or when the website would be available.

Mr. Bunton described a new non-profit organization established with the support of thirteen appraisal-related organizations, known as Alliance for Valuation Education. The alliance’s primary goal is to develop valuation education that broadens and complements those courses currently being offered in the marketplace. The Alliance will not be a provider of education. The education developed by the alliance will be made available for wholesale purchase by education providers and professional organizations who will serve as course presenters. Initial focus of the Alliances is on Continuing Education and may consider development of Basic Qualifying Education Courses or Remedial Courses later.

Wayne Miller, Chair of Appraiser Qualifications Board (AQB)

Background Checks Mandate

Mr. Miller announced that earlier that day, the Board voted to postpone mandate for background checks to 1/1/2017. States can still implement prior to this date, but after 1/1/2017, states will be required to complete background checks on all new appraiser applicants.

Personal Property Appraiser Criteria

Mr. Miller stated that the Personal Property Appraiser Criteria have not been updated since 1998. The AQB is working on updating these criteria and there will likely be an Exposure Draft released soon

Jobs Analysis Survey sent out to appraisers recently

A recent job s analysis survey was sent over 23,000 emails throughout the country. A total of 14.6% completed the entire survey and the board expressed gratitude for all those completing the survey. The results will drive how appraisers are tested in state exams. The initial results from the survey indicate that since 2008, state appraiser exams have been testing the “right” things. The AQB is looking to see how exams could be shortened without losing effectiveness. Mr. Miller also published the success rates for State Exams, nationwide. In 2013, 1st Time Test Taker Pass Rates for Certified Residential was 69% and for Certified General was 54%.

Other AQB Discussion points

o 466 of 509 USPAP Instructors renewed their instructor’s license this year. There were 24 new instructors.

o The AQB is considering a University Degree Program, where university students would take college courses that would count for college credit as well as Qualifying Education towards their appraiser license.

Barry Shea, Chair of Appraisal Standards Board (ASB)

The ASB is the largest it has been, currently at 8 members. Members include: 5 Certified Generals, 2 Certified Residential, and 1 Personal Property

Confidentiality & Ethics Rule. This rule as written as a few unintended consequences. As written, an appraiser is unable to show the appraisal report under investigation to their own attorney due. Additionally, the board is considering two confidentially concerns. One, how does the rule apply to clients that are no longer in existence, such as bankrupt banks. Also, how the rule applies to staff members of an appraisal company.

Courses being worked on by the ASB

o Appraisal Review Courses

o A course providing a more in-depth look at the applications of USPAP (beyond the 7- and 15-hour courses). This would be an optional course which would look at USPAP as it applies to extraordinary circumstances.

Rick Baumgardener, Chair of Appraisal Practices Board (APB)

Subject Matter Expert (SME) Process

o Mr. Baumgardener discussed the Subject Matter Expert (SME) Process. There is currently a SME pool of approximately 100 experts in various topics. Once a project has been identified, SME’s will define the Scope of Work for the project and the AQB will approve before the project moves forward. This is not meant to be a “How To” guide, but only provide the basic information for appraisers. The current SME project is the Valuation of Green Buildings. There is a Second Exposure Draft – Valuation of Green Buildings: Background & Core Competency out for comment. Future projects will divide Valuation of Green Buildings into Residential and Non-Residential buildings. The APB is now considering new projects, including:

Collection and Verification of Sales Comparable Data

Green Buildings Residential

Green Buildings Non-Residential

Tangible and Non-Tangible Assets

Valuation of Financial Reporting

Criminal History Reports and Background Checks – Defensible Decisions

Anne Petit, Superintendent of the Ohio State Division of Real Estate & Professional Licensing discussed Defensible Decisions in Administrative Regulation. Ohio has been completing Background Checks on appraiser applicants for some time. She covered the ethical and legal concerns related to implementation. Denials are appealable, but the applicant must appeal to the state board.

Alec Stone, Legal Counsel for California Bureau of Real Estate Appraisers stated that California statute now requires all new applicants to pass a background check. It is not yet clear if upgrades are required to pass a background check. Mr. Stone stated that 15% to 30% of initial applicants have a “rap” sheet, and over half of these are related to DUI’s. Less than 5% of offences are related to drug felonies or sexual misconduct, and less than 1% is related to fraud.

Tim Doyle, Senior VP, Conference of State Bank Supervisors discussed the NMLS System. It is available to State Regulators as a method to track their Appraiser licensees. It tracks pertinent data, including licenses, education, and discipline. It is also compliant with 2017 background check requirement. The systems are an approved channel for the FBI national database, required for proper background checks. Submitted background checks are received back in 2 to 12 hours.

Brian Weaver, Illinois Appraisal Coordinator asked Mark Mrnak on the panel about “Contingent Dismissals” used in Texas. Mr. Mrnak stated that Contingent Dismissals are successfully used in Texas to avoid formal disciplinary. This is available for 1st time offenders with minor or major deficiencies or 2nd time offenders with minor deficiencies. The offender must agree to the terms of the conditional dismissal. Terms may include courses, mentorship, or written assignments. It is usually a short timeframe for completing terms (~6 months). If offender meets required actions, the offense is dismissed with a warning letter which stays in the record, but it is not reported to ASC or AMC’s. A future offense would still be considered a 1st time offense. There are consequences if the terms are not met. The mentorship program includes board approved mentors and the offenders must pay for the mentor’s time. The offender is able to select their own mentor.

Scott DiBiasio, Appraisal Institute’s Manager of State and Industry Affairs asked panel how states might enforce compliance if appraiser was not required to comply with USPAP, only the USPAP Ethics and Competency Section, for Non-FRT (Federally Regulated Transactions) work. Panel was unsure how to respond, and stated that states require appraisers to be compliant with USPAP. Scott alluded to potential future changes that may require appraisers of Non-FRT appraisals to only comply with the Ethics and Competency Section of USPAP.

Panel Discussion: Supervisor/Trainee Course Development & Maintenance

Panel:

o John Brenan, The Appraisal Foundation (TAF) – introduced the Supervisory Appraiser/Trainee Appraiser Education Q&A published by The Appraisal Foundation. Worth checking out if you’re a trainee or supervisor. Note: State may add to the requirements beyond the federal requirements.

o Craig Steinley, South Dakota – implementation of a Supervisory/Trainee Appraiser course in South Dakota. Mr. Steinley discussed the implementation of the education in South Dakota. There is a core content section where the AQB provides minimum content. A second portion is the jurisdictional topics related to supervisory and trainee topics specific to the state. AQB allows the states to decide whether the course is considered Continuing Education or not. AQB does not stipulate time requirements. Training has ranged for various states has ranged from around four hours to two days. Illinois course is not yet complete, but is likely going to be a one day 7-hour course for both sections, and likely to be available on the fall of 2014. More to follow.

o Tim Doyle (NMLS) – Further discussed NMLS as a possible method for meeting background check compliance through the NMLS system. Noted: NMLS is owned by the Office of Comptroller and is a Not-for-Profit which is owned and regulated by state regulators. Potential future additions to system include: Examination Suite, Risk, Electronic Surety Bonds

Mr. DiBiasio discussed risk management guidance. Regulated Institutions are responsible for actions of 3rd Part Entities, such as AMC’s. This has moved more institutions (banks) to bringing AMC functions back in-house. He stated that there are approximately 60% to 80% less residential appraisals ordered through AMC’s currently than in the past year.

38 States have passed Comprehensive AMC Oversight & Registration Law and 17 jurisdictions have yet implemented any law. There are many states now looking to update their AMC law. Several states are considering a Recovery Fund versus Surety Bond. Additionally, several states are finding Surety Bonds at $25,000 or less inadequate and increasing to $100,000.

Some states have added a State Board Member for AMC’s and others have developed an AMC Advisory Board to advise the State Board

Other Issues being discussed concerning AMC’s are what constitutes an AMC. Dodd Frank Act, which currently relates primarily to residential appraisals, and if/how it relates to commercial appraisals. There is also discussion on what distinctions (if any) should be made between companies with employees versus independent contractors.

New Proposed Rules for AMC Act were released last week. Mr. DiBiasio offered a checklist he developed to help states analyze if they meet requirements (but stated it is only a working document, not a definitive guide).

The Government Accounting Office (GAO) is required under the Dodd-Frank Legislation to study the various valuation methods, appraiser selection methods, and appraisal delivery methods; in doing so, the GAO examined:

Conflict-of-interest and appraiser selection policies and views on their impact.

Their current report can be accessed by clicking this link. The Committee on Financial Services held a hearing July
13, 2011 associated with the GAO report release. The list of witnesses and a transcript of their testimony can be accessed by clicking this link.

Top Posts & Pages

Past American Society of Appraisers International President (’94-’95), Richard A. Kaufman, FASA, passed away on Tuesday, May 21, 2019. Dick was a career machinery and equipment appraiser and member of the Society for 42 years. He was a true supporter and active volunteer, holding numerous leadership positions, including: Chair of the International Activities […]

Tweet RESTON, VA–On April 26th, ASA’s RP-NAIFA Committee met at ASA’s offices in Reston, VA, for a daylong conversation around the ongoing activities of the committee, as well as to discuss growth opportunities for ASA in Real Property education and membership. Participating in the meeting were members of the RP-NAIFA Committee, as well as key […]

Tweet SAN FRANCISCO, CA — Eleven American Society of Appraisers (ASA) members attended the 2019 FEWA National Conference on April 26-27, 2019 in San Francisco, CA. The FEWA National Conference was a two-day learning and networking experience that provided advanced training skills for experts of all levels and disciplines. Based in San Francisco, the Forensic […]

By Sharon Reed DAYTONA BEACH, FL–The American Society of Appraisers (ASA) and The David B. O’Maley College of Business of Embry-Riddle Aeronautical University (ERAU) are jointly hosting a special session of Aircraft Appraisal certification coursework to meet the needs of a group of appraisers who were affiliated with the National Aircraft Appraisers Associat […]

By Sharon Reed SOUTH AFRICA — ASA Business Valuation Appraisers are invited to attend an exciting trip to South Africa from August 27 – September 8, 2019. Sponsored by ASA’s Business Valuation discipline, in collaboration with the Institute of Chartered Accountants of Zimbabwe (ICAZ), Great Escapes Travel and African Travel, Inc., this premium educational de […]

By Sharon Reed DAYTONA BEACH, FL – A cohort of 32 graduates recently completed the joint American Society of Appraisers (ASA)/ Embry-Riddle Aeronautical University (ERAU) Aircraft Valuation Certification Program at the ERAU campus in Daytona, Beach, FL. A graduation ceremony was held on March 15, 2019 in ERAU’s new Mori Hosseini Student Union with more […] […]

By Sharon Reed PHILADELPHIA, PA –The Philadelphia Chapter of the American Society of Appraisers (ASA) will hold its 14th Annual Spring Business Valuation Seminar on Friday, April 26, 2019, at the Doubletree Hotel in Plymouth Meeting, PA. The program will include a variety of topics presented by key thought leaders: ֍ Large Estate Valuation Issues […]

TweetBy Sharon Reed Dr. Vitaly Guzhva Discusses the Aircraft Valuation Program at Embry-Riddle Aeronautical University in Daytona Beach, Florida DAYTONA BEACH, FL — Aircraft appraisal certification candidate students based in the United States as well as from many other countries have attended the consistently sold-out American Society of Appraisers (ASA)/ E […]

TweetBy Sharon Reed Business Referrals are Among the Many Values of ASA Accreditation BOCA RATON, FL– Duane W. Hutchison, ASA, GG (GIA), MGA, CIA, an independent jewelry appraiser/owner of D&H Jewelry Appraisals in Boca Raton, Palm Beach County, FL, was recently hired for a major project by a high net worth client who found him […]

The Appraisal Institute announced March 25 that it attended several high-profile events throughout the month, which helped the organization enhance its role as the valuation profession’s thought leader.

The Appraisal Institute California Government Relations Committee announced March 24 a legislative campaign to amend the state’s appraisal license law to allow state-licensed appraisers to use valuation standards other than the Uniform Standards of Professional Appraisal Practice when performing appraisals for any purpose other than for federally related tra […]

Delinquency rates for commercial mortgage-backed securities fell for the fourth consecutive month in February to 5.58 percent, analytics firm Trepp reported March 19. Experts said that the declining number of delinquencies and a healthy dose of new issuances indicate a strong year for CMBS.

Foreclosures decreased by 4 percent between January and February, marking the lowest level of foreclosures since August 2006, analytics firm RealtyTrac reported March 19. The report noted the decrease is a sign that the housing market is on track to return to historic norms.

Average fixed mortgage rates moved down during the past week, with the average 30-year fixed mortgage rate continuing to hover below 4 percent, Freddie Mac reported March 19 in its weekly Primary Mortgage Market Survey.

Mortgage lenders are optimistic about the housing market, saying they expect increased mortgage demand and larger profits over the next three months, Fannie Mae reported March 18 in its Mortgage Lender Sentiment Survey. The survey also noted that credit tightening has gradually eased up over the last few months.

Some California farmers are finding that their water has greater value than their land, and so instead of planting crops they are selling their water rights — for as much as $700 per acre foot — to Southern California communities, CBS San Francisco reported March 17.

A bipartisan group of senators, including members of the Senate Banking committee, are fighting against the federal government’s use of Fannie Mae and Freddie Mac’s guarantee fees to cover federal spending, HousingWire reported March 17. The senators said the practice is a “back-door tax” on homeowners.

The Federal Reserve, citing its confidence in the U.S. economy, set the stage March 18 for its first rate hike since 2006 — at the same time it slightly downgraded its economic outlook, USA Today reported. The Fed said growth “had moderated somewhat” due to several factors, including a sluggish housing market.

Fannie Mae and Freddie Mac may need another taxpayer bailout due to increased risks caused by shrinking reserves, according to a report from the Federal Housing Finance Agency Office of Inspector General, Reuters reported March 18. The government-sponsored enterprises received a $187 billion taxpayer bailout in 2008.

Staff

Illinois Coalition of Appraisal Professionals

ICAP is one of the nation’s oldest and largest coalition of professional appraisers, established in 1994 to be a unified voice for Real Estate Appraisers in the State of Illinois.